More New Deal Notes
FQ: Would our economy have recovered on its own with the help of New Deal programs? What evidence can you provide to
support your answer?
The Second New Deal
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The Second New Deal was more radical in nature because of Roosevelt’s support of the poorer classes at the expense
of the rich.
Roosevelt needed to respond to the more radical voices.
Mid-term Congressional elections in 1934 had returned a more radical House of Representatives which was expecting
wide-ranging legislative action and was prepare to support it.
The climate in the new Congress was for action, and Roosevelt wanted to prevent this. He did not wish to surrender the
initiative to Congress in preparing New Deal legislation.
Roosevelt was frustrated with the Supreme Court, with the wealthy, with forces of big business.
The American political climate at this time was very divided and extreme.
Roosevelt wanted the support of the left for the upcoming elections.
Legislation:
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Emergency Relief Appropriation Act of 1935, authorized largest appropriations for relief to provide employment
through federal work. ($20 billion dollars were used in the 1930s.)
Works Progress Administration was a major employer and recruited people for major work projects.
The WPA employed the people who would never have been employed others. Also engaged in large scale projects but
was not supposed to (example: Lincoln Tunnel).
National Youth Administration (NYA): was set up to encourage education and provided part time jobs for students to
fund their education.
Rural Electrification Administration: formed to build generating plants and power lines in rural areas.
o REA offered loans at low rates and farmers were encouraged to work together to acquire electricity supplies
Resettlement Administration: merge all rural rehab projects into one agency
o Ran by Rexford Tug
o bought good land and taught them how to farm and use modern machinery.
o Green belt community: new towns in rural areas based on careful planning.
o Only 3 green belt communities were made
Revenue (wealth tax) Act:
o pay for New Deal reforms and was viewed negatively by those affected
Roosevelt's main goal was to reduce gov deficit spending (when gov spends more than income)
Federal inheritance tax: government tax on the estate of the deceased
o New tax didn't raise much money because there were loophole
o Roosevelt taxed the middle classes more
Wagner-Connery National Labor Relations
o Roosevelt uninterested in subject
o Mistrust of labor unions in USA
National Labor Relations Act was an important part of the Second New Deal and was an American milestone
o Guaranteed workers the right to collective bargaining through he unions of their own choice
Public Utility Holding Company Act
o ordered the breaking up of all companies more than twice removed from the operating company
o did this by making companies register with Securities Exchange Commission
o SEC was in charge of companies' financial transactions and stock issues
Social Security Act: first federal measure of direct help as worker's rights and was built on the utter
o Provided for old age pensions to be funded by employer and employee contributions and unemployment
insurance to be paid by payroll taxes.
o Roosevelt wasn't interested in major redistribution of wealth
o Limitations of Social Security Act: inadequate for poor, pensions paid at min $10 and max $85 per month
o The people who needed most help were excluded from the act because employers weren't able to pay... but it
was for blind or disabled people.
o Assessment: major break with American gov tradition
o Conservatives didn't like it
o They increased residence qualifications and means tested benefits
o Roosevelt was satisfied with Act because it showed that he cared about the American people
Banking Act of 1935: give fed government control of banking in US
o Each bank could elect its own head but had to be approved by FRB federal reserve board
Assessing the Second New Deal:
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Banking system was centralized
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worst excesses of capitalism were addressed
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labor unions given a voice
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Social Security Act gave first national system of benefits
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development of existing policies
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creation of WPA
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REA modernized rural areas of US
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Not all of legislation was effective: ex. Revenue Act of 1935 made people angry
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Some people thought Roosevelt was doing too much
The Supreme Court
The ‘sick chicken’ case
Judiciary Reform Bill
Failure of Judicial Reform Bill
The Supreme Court
 Roosevelt was concerned with the operations of the Supreme Court and felt that it
needed reforms.
 The Supreme Court supported the New Deal but increasingly declared legislation
unconstitutional.
 Found the Farm Mortgage Act unconstitutional; removal of the trade commissioner
was the responsibility of Congress, not president.
 Found the NIRA to be unconstitutional.
 One of the Court’s most serious decisions, motivated Roosevelt.
 Involved the Schechter Brothers (butchers) who were selling chickens unfit for
consumptions.
 They were prosecuted by the NIRA for breaking codes of practice, but appealed to the
Supreme Court.
 Decided that it was a matter for the state court, not federal, and the poultry code was
declared illegal.
 Meant that federal government can’t interfere with state issues.
 Federal government couldn’t prosecute for breaking NIRA codes, so all the codes
must be unconstitutional.
 NIRA couldn’t survive without the codes.
 The government had no powers to oversee nation-wide economic affairs
 Roosevelt disapproved of the Supreme Court Judges.
 On 3 February 1937 he presented the Judiciary Reform Bill; proposed that the
president could appoint new judges if others failed to retire.
 Could appoint up to six new judges.
 Argued the existing judges couldn’t keep up with their work.
 Wanted to pack the court with his nominees that favored the New Deal.
 His plan backfired.
 Chief Justice Hughes argued that more judges would make the work more difficult.
 Roosevelt underestimated the popular support for the Court.
 Roosevelt was seen as a dictator.
 In July the Senate rejected the Judiciary Reform Bill, 70 votes to 20.
 Successes for Roosevelt:
 Justice Van Devanter, who was ill, announced his retirement.
 Court began upholding his legislation, like the National Labor Relations and the
Social Security Acts
 Roosevelt appointed his supporters as judges retired.
Agriculture
Problems with the AAA
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The AAA tended to be dominated by the most powerful landowners.
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They thought little about turning out their sharecroppers or tenants.
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There was an increasing feeling that the AAA only really benefitted the wealthy.
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While farm income doubled overall in the 1930s, it had only reached 80 per cent of the amount farmers were receiving
before 1914.
The Dust Bowl
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Years of over-ploughing in agricultural regions had made much of the soil fine and dusty.
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The Natural Resources Board estimated in 1934 that 35 million acres of previously arable land had been destroyed and
the soil of a further 125 million acres was exhausted.
The effects
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Homes were buried and formerly arable land was exposed as bare rock.
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It has been estimated that the state of Oklahoma alone lost 440,000 people during the 1930s, while Kansas lost
227,000.
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Unemployment stood at 39 per cent in Arkansas in 1933 and about 30 per cent in Missouri, Oklahoma, and Texas.
Migration of Farm Workers
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Around 220,000 people migrated to California in search of work
Government Measures
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To combat erosion, the government had set up the Soil Erosion Service in August 1933.
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It encouraged farmers to consider new ideas such as contour ploughing to hold the soil.
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Even if the land was reclaimed, farmers often began to over-plough again, and the Dustbowl returned in some areas
Long-term Effects
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The Agricultural Bureau estimated that in 1933 about one in every 10 farms changed hands and that about half of those
sales were forced
Labor Relations
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There was considerable anger at the use of ‘blackleg’ labor during disputes, particularly if the ‘blacklegs’ were of a
different ethnic group from the strikers
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The ‘Memorial Day Massacre’ took place in Chicago on 30 May 1937.
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As protesters marched on the mill, Chicago police fired into the unarmed crowd, killing 10 and wounding 30, some of
whom were permanently disabled
Creation of the Committee of Industrial Organizations
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The American Federation of Labor (AFL) traditionally favored craft unions and did not encourage semi-skilled and
unskilled to unionize
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John Lewis of the United Mine Workers wanted to see large industry-wide unions set up rather than small individual
craft-based ones.
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Eventually he and others formed together to create the Committee of Industrial Organization (CIO).
Achievements of the CIO
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Using threat of massive strikes, the CIO had achieved union recognition in the automobile, steel, rubber, electricity,
textile, and farm implement industries by the end of 1937.
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The number of strikes rose from 637 in 1930 to 2172 in 1936 and 4740 in 1937.
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Both unions and authorities looked to Roosevelt for help, but he upset both by doing nothing.
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He felt that the two sides had to solve the problems for themselves.
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Hardly any of the New Deal legislation supporting them had been initiated by him.
The Roosevelt Recession, 1937-1938
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The Roosevelt Recession
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Downswing in the economy associated with Roosevelt’s cutbacks in government spending in 1937
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Roosevelt cut federal expenditures in June 1937 to try and balance the nation’s budget; business had not recovered in
time to fill the gaps caused by government
Effects of the Recession
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Number of people employed rose from 7,000,000 to 10,390,000 in 12 months; employment in the manufacturing
industry fell by 23%
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Social security payments accounted for the loss of $2 billion of the nation’s wealth
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Production of items like motor cars dropped as much as 50%
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National income dropped 13%
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66% of gains made during the New Deal period were lost
Causes of the Recession
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Government officials blamed big business and practices such as price fixing among large corporations
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Big business representatives blamed too much government and high taxes for problems regarding big business
How did Roosevelt try to end the recession?
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Chief of the Federal Reserve Board, Marriner Eccles, convinced Roosevelt to turn to deficit spending
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Unemployment was still high in the years following; 9,000,000 unemployed in 1939
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Policies eventually dominated by the coming of World War II
The Third New Deal
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Goals: Fix 1937 recession through “permanent government spending”
Programs:
What: Bankhead-Jones Farm Tenant Act (July 1937)
How: Created Farm Security Administration
Resettled farmers by giving them low interest loans
Gave farmers medical and dental centers, along with funded loans to buy machinery
Criticisms: N/A
Extra info: Made 30 camps to temporarily hold farmers
By 1947, 40000 farmers bought farms and 900000 families improved their farms by borrowing $800 million
Most loans were repaid
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What: Second Agricultural Adjustment Act (February 1938)
How: Quotas in five stable crops could be made by a 66% vote from farmers
Allowed farmers to store surplus produce in order to sell it when prices rise
Made Food Stamp Plan for farmers to distribute surplus for relief
Criticisms: Too complex – large-scale farmers had to deal with the details, whom the small farmers distrusted
Extra info: Food stamps gave 50 cents of commodities for each $1 spent on groceries
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What: Wagner-Steagall National Housing Act (September 1937)
How: Gave $500 million for slum clearance and the creation of public housing
Criticisms: The $500 million was only have of what was requested
Only allowing 10% of the funds per state was bad because the problem was worst on the northeast
Extra info: Millions remainder homeless
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What: Fair Labor Standards Act (June 1938)
How: “Fixed minimum wages and maximum hours of work in all industries engaged in inter-state commerce.”
Minimum wage was 25 cents/hour, intended to eventually reach 40 cents/hour
Maximum hours was 44 per week, hoping to eventually become 40 per week
No children working younger than 16; no one younger than 18 in hazardous work
Criticisms: Certain exceptions made to get it passed
Didn't acknowledge problems of African Americans
Extra info: Wages of 300000 rose instantly, and hours of 1.3 million were reduced
Outcomes/impacts: Improved agriculture by giving more ways for small farmers to survive
Created more public housing
Improved work conditions
Revenue Act of 1938
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Goals
o Raise money for government
o How it worked
o Tax company profits
o Congress believed it stunted industrial growth
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Criticism
o Congress disagreed with Roosevelt's approach by removing the tax company profits
o Roosevelt had become too radical for Congress
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Effects
o Congress took away some of the president's power
o Shut down the revenue act of 1938
o More Americans feared America becoming a dictatorship
o Suspicious of Roosevelt's intentions
o Roosevelt blamed for depression